Erika Mangrum was thrilled with the new acupuncturist she'd
hired to work at Iatria Spa and Health Center, her 62-person day
spa in Raleigh, North Carolina. "He accepted, and we turned
down all the other candidates," says the president of the $3
million company.

Mangrum, 38, looked forward to the employee's arrival.
"Then," she recalls, "he opted out." After
accepting the job, but before reporting for duty, the candidate
informed Mangrum the job wasn't going to work out after
all.

Mangrum had to go back to the other candidates she'd turned
away and say she had an opening again. "That's a little
embarrassing," she says. "Plus, you may have alienated
them or lost the candidate to another job. It's more time and
more energy."

Counteroffer Conundrum

As the economy and hiring pick up steam, entrepreneurs can
expect more cases of new-hire fallout. "It happens in between
1 out of 20 and 1 out of 10 cases," says Elliot Clark, COO of
Wayne, Pennsylvania, outsourcing firm Kenexa Corp. "And
it's more common in high-demand areas."

Fallout rates vary by local job markets, industry and skill.
Software developers with in-demand expertise, for example, may be
courted by companies nationwide. No matter what the cause, fallout
costs would-be employers in effort and outlays for advertising,
candidate travel, search-firm or agency fees, and other
expenses.

When fallout is caused by another employer's counteroffer,
don't blame the candidate or the rival employer. Blame yourself
for failing to make a market-aware offer and for failing to prepare
the candidate for counteroffers.

Always study the employment market in advance to make sure
you're competitive, says Nicholas Di Marco, professor of HR
management at Webster University in St. Louis. "Know your
competition, and know where you're strong and not
[strong]," Di Marco says. If other employers are likely to
offer a higher salary, emphasize the things money can't buy,
such as a pleasant workplace, relaxed dress code or opportunities
for advancement. "You may not be able to play up the money,
but you may be able to play up the culture," Di Marco
says.

If you suspect new hires will receive counteroffers, coach them
on why and how to reject them. Point out that more money won't
necessarily change factors that originally caused the candidate to
seek a new position, such as lack of opportunity. "You want to
sell them on the idea that a counteroffer is a negative that may
come their way," says Clark. "Prepare the candidate for
the counter-offer and get them ready to defeat it."

Also, take the high-touch approach. Don't lose contact
between the time someone accepts your job offer and his or her
first day on the job. Call for a chat and checkup a week or two
before his or her start date, and again a few days before. Pay
close attention to the new hire's demeanor. "You can tell,
if they're nervous or uncomfortable, that something is
wrong," says Clark.

Send personal, handwritten notes welcoming new employees.
Information about your community and current news of company events
and achievements help recent hires feel like part of the team. Keep
it up even after employees report for work. A good orientation
session, along with personal information about the people employees
will work with, makes new hires feel like they belong, says Di
Marco.

If worse comes to worst and a recent hire informs you that
they've accepted a counteroffer, don't fret. Clark says
that 85 percent of the time, a worker who takes a counteroffer
leaves within a year. If you're still interested later on,
you'll likely get another chance to snare the employee--and
this time keep him or her onboard.

Mark Henricks writes on business and technology for leading
publications and is author of Not Just a Living.